Some natural resourcesoil and minerals in particularexert a negative and
nonlinear impact on growth via their deleterious impact on institutional
quality. We show this result to be very robust. The Nigerian experience
provides telling confirmation of this aspect of natural resources. Waste
and corruption from oil rather than Dutch disease has been responsible for
its poor long run economic performance. We propose a solution for addressing
this resource curse which involves directly distributing the oil revenues
to the public. Even with all the difficulties of corruption and inefficiency
that will no doubt plague its actual implementation, our proposal will, at
the least, be vastly superior to the status quo. At best, however, it could
fundamentally improve the quality of public institutions and, as a result,
transform economics and politics in Nigeria.